Fitch: Medical Malpractice Reform Efforts Will Promote Market Stability.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 4, 2003

Based on recent turmoil in the medical malpractice insurance market, Fitch Ratings has completed further study of this sector and recently published a new report. After examining market fundamentals, recent poor operating

As a result of a sharp increase in underwriting losses, several insurance insolvencies and market withdrawals by other significant underwriters, malpractice policyholders have experienced greater difficulty gaining coverage, particularly in troubled markets, and significant increases in medical malpractice premium rates as insurers attempt to return to profitability.

Fitch's analysis compares underwriting results by state based on differing legal practices pertaining to medical malpractice. This review indicates that jurisdictions with laws in place similar to those sought by the various reform initiatives have historically produced lower incurred loss ratios and better underwriting results than markets that do not have these provisions.

'Fitch believes that implementation of medical malpractice reform in individual states and at the federal level will lead to less volatile and lower underwriting costs, and that lower loss costs will ultimately lead to greater market stability and better insurance pricing,' said James Auden, Senior Director, Fitch Ratings. 'However, rate improvements may not be immediate in states that pass reform measures due to the fact that malpractice insurance pricing was severely deficient in recent years.'

This deficient pricing is symptomatic of recent problems within the property/casualty insurance market in medical malpractice and other casualty lines. Thus, Fitch believes that to maintain longer term stability of the malpractice insurance market, not only is widespread legal reform necessary, but also a restoration of underwriting discipline and adequate reserving practices by insurers.

The new Fitch report is titled 'Medical Malpractice Insurance: In Intensive Care'. is available on Fitch's web site at 'www.fitchratings.com' by selecting 'highlight reports' under the 'insurance sector' or by contacting the Ratings Desk at 1-800-893-4824.